Consider Outsourcing

Consider Outsourcing Vinay Nagpal Director, Product Management Hosting & Data Center Services Tata Communications

Computer World Forum Data Hot-House Summer 2008

©2008 Tata Communications, Ltd. All Rights Reserved

Considering Outsourcing? ƒ Why buy the cow if you need only the milk? ƒ Why run your own data centers when you can just pay to have your machines hosted or have your computing resources supplied as a utility?

ƒ There are cases where it may make sense to have your own farm!

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The CIO’s conundrum “Need to show the value of IT to the business” “Need IT infrastructure to support mission critical applications" “SLAs aligned to needs of the business? – the performance – cost trade-off” “Business needs changes implemented quickly – but we need to get it right” “Users are getting more and more demanding. There is a deluge of information to manage, and the underlying infrastructure is complex" “Our internal admin costs are too high” “We need to improve business performance” “We don’t know what we have got out there” “We need to be more customer oriented”

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Global Data Center Marketplace

The New World

Globalization

Web 2.0

India & China

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Data Center Market Trends ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ

Various ‘Sourcing’ models Enterprise data center/IT consolidation Convergence of network & IT realms SPs adopting Virtualization/SaaS Utility Computing Increased volume of digital media Flexibility and support to scale IT infrastructure – web, apps, databases Increased power/cooling requirements Space constraints driving next-generation data center

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Business Drivers for Outsourcing

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Global Data Center Market ƒ IDC has forecast that the market will grow from $29.57 billion in 2005, to $48.37 billion in 2010 (CAGR of 10%). ƒ Worldwide IT and business services: Focus on SMEs, global assets, global sourcing for innovation, and industry focused BPO ƒ IDC’s latest forecast for the Asia/Pacific market (excluding Japan) in IT Services: 2010 China will overtake Australia ƒ In 2011 India will overtake Korea to become the third largest market in the Asia Pacific region.

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India and China will improve their position in the APAC DC market APAC Data Center Market Split by Country (%)

INDIA Data Center Outsourcing ($ million)

“As China and India increasingly redefine the future of technology and innovation, knowing how to map a course into that future will be a core competency of the most accomplished travelers” … Gartner

Source: Gartner

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Asian Data Centre Space Forecast: 2006 to 2010 4500

China

4000

Hong Kong

3500

Indonesia

3000

India Japan

2500 2000

Korea (South) Malaysia

1500

Philippines

1000

Singapore Taiw an

500

Thailand

0 2006

2007

2008

2009

2010

Chart 1 - Data Center Space Grow th Forecast 2006-2010 by country (Source: BroadGroup)

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Asian Data Centre Market Forecast: 2006 to 2010 Country

2006

2007

2008

2009

2010

CAGR%

600

725

900

1150

1450

35

1100

1200

1300

1550

1750

13

320

360

400

480

530

40

India

1900

2500

3000

3500

3700

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Japan

3800

3900

4000

4100

4200

3

Korea (South)

1000

1150

1250

1350

1400

10

Malaysia

900

1200

1300

1400

1500

15

Philippines

900

1000

1100

1150

1200

8

Singapore

1300

1500

1600

1700

1750

9

Taiwan

800

850

900

950

950

5

Thailand

1100

1150

1200

1250

1300

5

13420

15335

16950

17330

19580

11.5

China Hong Kong Indonesia

Total

Asia Data Center Space Forecast 2006-2010 (figures in '000 square feet) Space forecasts are based on carrier neutral facilities, carrier owned data centers, and space provided by hosting or IT service firms.

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Drivers of Data Center Growth Globalization & Outsourcing

Regulation & Business Continuity

ƒ Outsourcing of IT and application development demands infrastructure and managed services ƒ Entry into new markets requires IT infrastructure and capabilities ƒ Alternate IT infrastructure and services for business continuity and compliance, particularly for Banking and Financial Services companies ƒ Data privacy and security issues ƒ Serve customers quickly and locally to improve experience

Time to Market Considerations

ƒ Application and services roll out to emerging markets such as India, China and South East Asia ƒ Data Center Infrastructure easily available for applications

Reduced IT Budgets

ƒ Rising costs of real estate and power ƒ Technology obsolescence, manpower churn, management overheads ƒ Skills of M&E – not necessarily core to IT

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Challenges in building your own Data Centers

Real Estate

Core Infrastructure

Operations

ƒ Availability and cost

ƒ Space size and scalability

ƒ Proximity to fiber and choice of providers

ƒ Commitment - contract vs. lease

ƒ Heating, Venting, Air Conditioning (HVAC)

ƒ Power infrastructure and costs

ƒ Security (manned, access, surveillance)

ƒ Environmental controls – M&E

ƒ 3 P’s: Pipe, Power, Ping

ƒ Maintenance

ƒ 24x7 support (3 Shifts)

ƒ Monitoring

ƒ Security

ƒ Staffing and retention of skills

ƒ Statutory approvals and regulations

ƒ Fire suppression

ƒ Multiple vendor contracts

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Selection criterion to Outsource IT infrastructure ƒ Location: ƒ Globally expansive footprint ƒ Ability to deliver consistent services across multiple regions ƒ Data centers in mature markets and emerging markets

ƒ Connectivity: ƒ Highly available, secure and integrated network

ƒ People: ƒ Technically competent IT staff

ƒ IT infrastructure and management: ƒ Well-defined and flexible roadmap ƒ Operational efficiencies ƒ Adherence to compliance

ƒ Financial Viability

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…and sometimes it makes sense NOT to Outsource ƒ ƒ ƒ ƒ ƒ ƒ ƒ

Assets on the ground Custom/legacy system requirements Security requirements Extent and depth of management oversight Regulatory and compliance issues TCO consideration Footprint and facilities requirements

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Data Centers Outsourcing Options in Asia Pacific ƒ Australia & New Zealand ƒ ƒ ƒ ƒ ƒ

Good IT infrastructure Experienced IT staff Good service quality Network latency – far from Asia No direct routes connecting India & China

ƒ South Korea, Japan & Taiwan ƒ Good network to China & HK ƒ Service quality and network performance are good ƒ Far from South Asian countries ƒ Limited capacity to India ƒ High labor and real estate costs

ƒ Hong Kong & Singapore ƒ ƒ ƒ ƒ ƒ

Good IT infrastructure Experienced IT staff Excellent network coverage Good language skills High labor & real estate costs

ƒ India & China ƒ Growing markets ƒ Service quality improved but inconsistent ƒ IT skills are improving ƒ Limited international connectivity ƒ Huge domestic market

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Tata Communications in the Data Center Market

Vision Deliver a new world of communications to advance the reach and leadership of our customers.

Emerging Markets INDIA, ASIA incl CHINA, SOUTH AFRICA

NEW NEWWORLD WORLDOF OF COMMUNICATIONS COMMUNICATIONS

Converged IP Solutions

Managed Services

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Tata Communications Data Center Strategy Global Footprint

ƒ Data center infrastructure in key geographies ƒ Presence in both developed and emerging markets

Integrated with Network Services

ƒ Leverage extensive global network integrated with data centers ƒ Network Services: IP, MPLS, Ethernet WAN for DC and end sites ƒ Carrier diversity to support redundancy requirements

Consistent Service Capabilities

ƒ Data centers are based on consistent standards – Tier 3 specifications ƒ Based on global and industry standards – ISO 20000, 27001, SAS70

Out-tasked Managed Services

ƒ Managed IT infrastructure services – servers security and network ƒ Managed Hosting and Storage ƒ Standards-based management for consistent service capability

Captive Data Centers

ƒ Leverage in-house experience and expertise along with partners to build captive data centers

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Data Center Services and Capabilities Infrastructure

ƒ ƒ ƒ ƒ

Multiple hosting and colocation facilities Network Colocation and IT Hosting suite of services Data Centers build to Tier 3 standards Integrated with backbone network

Colocation

ƒ ƒ ƒ ƒ

Racks and cages Remote Hands Services IP and Bandwidth Services Managed Security- Firewalls, DDoS, and UTM

Hosting Services

ƒ Managed Hosting Services – Servers, Storage, Security, Network ƒ Virtualization, DB, Dual Site Recovery Replication in development ƒ 24 x 7- operations, management and monitoring and OS level management; Linux, Solaris, Windows, AIX ƒ Centralized Management Platform with customer view portal

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Tata Communications – Global Footprint of Colocation and Hosting Facilities UK ƒ Stratford, London ƒ Highbridge ƒ Peterborough

EUROPE ƒ Lisbon, Portugal ƒ Seixal, Spain ƒ Derio, Spain

NORTH AMERICA Canada • Montreal • Toronto

USA • • • • • •

New York, NY North Alameda, LA Santa Clara, CA Portland, OR Wall, NJ Guam

INDIA • • • • • •

Mumbai Chennai Delhi Bangalore Hyderabad Pune

ASIA PACIFIC ƒ Shinagawa, Tokyo ƒ Toyohashi, Japan ƒ Singapore

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The Road Ahead…

The Next Wave Driving Data Center Outsourcing Green IT

ƒ Energy use and power and cooling management and optimization ƒ New IT systems and infrastructures; alternate sources of power ƒ Cost reductions and savings; environmental impact

Virtualization

ƒ Logical server installed base growth: 65 million versus 45 million of physical server install base by 2010 ƒ Virtual Data Center; from consolidation to dynamic flexible infrastructure ƒ Anywhere Enterprise; DC, Application, Network and Desktop virtualization

Captive Data Centers

ƒ BO, BOT models; for the enterprise, but operated, managed as a service ƒ Issues of capacity management, infrastructure upgrades, aligned to business needs

Security

ƒ Anytime, anywhere information availability drives shift towards policybased security management and administration

Application/ Content Delivery

ƒ Networks make it a reality; network as a delivery platform; orchestration of virtual resources

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Summary ƒ Key drivers for Data Center Outsourcing ƒ ƒ ƒ ƒ

Cost savings by avoiding capex investment Limited IT skill-set Technology challenges Improve performance and availability of IT systems and websites

ƒ Asia Pacific region is positioned to take a significant portion of Global Data Center Market ƒ Singapore is currently the regional hub of Data Center business ƒ Increased focus on emerging markets – India & China

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Thank you! Vinay Nagpal Tata Communications www.tatacommunications.com